The government is going to generate 78% of that in 2020 ALL BY ITSELF. Net investment, dividends/buybacks, household saving and ROW saving all added up to $4.7 trillion in 2019. And how big of a boon this is to corporate America because, ultimately, it all flows to corporations because Americans don’t save. People don’t seem to understand how big this number is. The government’s deficit should be ~$3.7T this year. Government saving, on the other hand, has been a huge, huge boost. Clearly, those first three items will be drags for the foreseeable future. This is the kicker for the stock market:Ĭorporate Profits = Investment + Dividends/Buybacks – Household Saving – Government Saving – Rest of World Saving As I noted in my piece saying this wasn’t the next Great Depression, the government’s response has been massive here. The stock market will always sniff out a recovery before the data shows it because people are setting prices based on what they expect to happen, not what is actually happening.īut here’s the big thing the market is grappling with right now. In that case, the market was obviously right.

The stock market is anticipating years of future growth. In November of 2009, when the financial outlook still looks dreary, the stock market was up 53% year over year while the economy was up 1% year over year. To better understand how the stock market thinks let’s review the 2009 recovery. Sometimes right, sometimes wrong, but never in doubt. Market”, a man (yes, a man) who is bi-polar, constantly screaming out his opinions in a manic way. Warren Buffett always describes this as “Mr.

The stock market’s fluctuations are a series of guesses about future outcomes. So, while we see everything for what it is, the stock market is looking for what it might become. How is this possible? What is going on? Is it all a conspiracy by the Fed? Are stock traders just insane? All of the above? What do we make of all this? Let’s talk about it.įirst, the stock market is forward looking. And the economy just had one of its worst months ever. The stock market just had its best month since 1987.

What is the stock market doing today